When does food processing work become SR&ED?
A new recipe is not automatically SR&ED. The Canada Revenue Agency (CRA) asks for two things. First, the work must pursue a scientific or technological advancement. Second, it must rely on a systematic investigation, carried out by experiment or analysis.
The starting point is what the CRA calls technological uncertainty: it is unknown or uncertain that a result can be achieved, because of an insufficiency in the available scientific or technological knowledge. If your team, or your suppliers, already knew how to get there, there is no uncertainty.
The CRA also states, in its 2015 policy (now archived), that novelty, uniqueness or added functionality alone do not establish a technological advancement. A product can be new on the shelf without the work behind it being SR&ED.
Which situations deserve a closer look?
Here are typical food processing situations where technological uncertainty may exist. They are starting points to examine, not guarantees: everything depends on the facts of your project.
- Extending a product's shelf life without the usual preservative, when neither the literature nor your suppliers offer a known solution.
- Adapting a process (cooking, drying, extrusion, pasteurization) to an ingredient whose behaviour is poorly understood.
- Moving from a lab process to production, when results change with scale in unpredictable ways.
- Modifying a production line to reach a precision or throughput that known equipment cannot achieve.
The CRA itself illustrates technological uncertainty with a process example: low-temperature extraction of oil from oilseeds, with no documented precedent.
What does the CRA not accept?
The CRA excludes, among other things, routine quality control, market research, style changes, routine data collection and the acquisition of knowledge or know-how that already exists. Commercial production is also excluded.
In food, this often covers flavour adjustments with no technical question behind them, new formats or packaging that are purely aesthetic, and applying a method a supplier already knows.
What the Tax Court of Canada reminded us in 2024
A 2024 Tax Court of Canada decision (Biscuiterie Dominic inc. v. His Majesty the King, 2024 TCC 97) gives a concrete benchmark. According to published analyses, two bakery companies claimed SR&ED for six projects: natural preservatives for croissants, quinoa cookies, shelf life of chocolate-filled pastries and filled croissants. The Court rejected all six.
The reported reasons are instructive:
- The ingredients and methods were known: there was no technological uncertainty that a standard approach could not eliminate.
- The companies relied on advice from their suppliers.
- Testing was mostly qualitative (taste, texture), without scientific data.
- Integration into the production line was routine engineering.
The lesson is not that food is excluded. It is that the file must show where the uncertainty was and how it was investigated.
How to build a solid file
- Define the problem in measurable terms: for example, a target shelf life and the conditions it must hold under.
- Look at what already exists first: literature, suppliers, patents. If the solution is known, it is not SR&ED.
- Run trials with data: water activity, pH, microbial counts, texture measurements, depending on the product, rather than tastings alone.
- Keep dated records while the work happens: the CRA says documents generated when the work was carried out are the most common. It also lists photographs, videos and samples.
What the credit can represent
For most Canadian-controlled private corporations, the enhanced investment tax credit is 35% of qualified expenditures, up to the expenditure limit, which rose from $3 million to $6 million for tax years beginning after December 15, 2024. Other entities receive 15%, as do expenditures above the limit. The limit can be reduced based on taxable capital. The credit depends on your qualifying expenditures and your situation: it is never guaranteed.
Claims are filed within 18 months after the end of the tax year. Since April 1, 2026, the CRA also offers an optional pre-claim approval, with a determination within eight weeks.
Having your project reviewed
If your team had to solve a technical problem whose answer did not exist at the start, a review is worth it, ideally before your year-end, while notes and test results are still at hand. At Hubvention, we help you see whether your work qualifies and structure the file. Book my diagnostic →